The government will not lift the blanket ban on the intake of foreign workers until it is convinced that employers will stop using agents and take full responsibility over the welfare of their workers.
Deputy Home Minister Datuk Nur Jazlan Mohamed said industry players especially those in the Small Medium Enterprises (SME) prefer using agents to hire workers in order to escape from being held accountable for their welfare.
“The blanket ban will not be lifted until employers especially the SMEs change their attitude.
“They are asking for more foreign workers to be allowed into the country despite the current numbers that we have, but they refuse to take responsibility over the welfare of their workers.
“So the ban will remain until we are convinced that they have stopped using agents’ services,” he said in a talk held at the International University and College (Inti) today.
Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi on March 12 announced that the government had decided to stop the recruitment of new foreign workers including the initial plan of bringing in 1.5 million Bangladeshi workers.
Following the temporary freeze, sectors that are heavily dependent on foreign workers such as manufacturing complained that they did not have enough workers to continue their operations.
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As of July 1, the new minimum wage rate will come into effect. In Peninsular Malaysia, minimum wage will be RM1,000 or RM4.81 per hour. In Sabah, Sarawak and Labuan, minimum wage will be RM920 or RM4.42 per hour.
A minimum wage policy is always resisted by employers and it is no different in this country. It took quite some time before employers would meet their obligation when a minimum wage was introduced.
As of July 1, the new minimum wage rate will come into effect. In Peninsular Malaysia, a hike of RM100 takes it to RM1,000 or RM4.81 per hour. In Sabah, Sarawak and Labuan, the increase is RM120, taking the minimum wage to RM920 or RM4.42 per hour, definitely not a king’s ransom, but still disputed by bosses. They argue that increased cost of production is not tolerable given a weakening economy. To add insult to injury, they threaten to pass the cost on to consumers. It is important to remember that the minimum wage is about providing every worker a living wage and, as the government states, it is for all, including foreign workers. This is a very important provision because if employers consider it too high, then they will be more circumspect about importing labour.
As a result, to continue production, manufacturers, for example, will need to mechanise further. The upgrading of technology is part of the transformation exercise to modernise the economy. Thus far, because salary for migrant labour is kept depressed, manufacturers opt for labour intensive operations. The minimum wage law then makes them, when technology promises to increase productivity.
Meanwhile, it will also end the use of unskilled labour, helping the government’s upskilling effort. Indeed, if employers carry through their threat of passing the increased cost of production to consumers, theoretically, it is justifiable, as long as there is no profiteering. Ultimately, it is up to the consumer to buy or not to buy. And, when the money goes towards the salaries of those doing 3D jobs (dangerous, dirty and difficult), it will, in the end, make these jobs attractive enough for Malaysians who go abroad as 3D workers, because the pay is much better.
This is another facet of minimum wage; although it must be said that paying workers doing 3D jobs dirt money is not acceptable. As the New York City sanitation workers strike in 1968 demonstrated, this “dirty” job is indispensable to public health and general cleanliness. At the end of the strike, some 100,000 tonnes of trash were uncollected from the streets. The New York Times had said the city looked like “a vast slum”. When 3D workers withhold their labour, the community is in trouble.
Naturally, minimum wage aims to raise the standard of living of low-paid Malaysians. It is an exercise in wealth redistribution, a concomitant arrangement of the social contract because a public policy that marginalises low-paid workers is one that invites trouble. Malaysia has been very fortunate that gaps are filled by migrant workers. However, as the shortage of Indonesian domestic help demonstrates, when countries of origin modernise, and employment opportunities increase, they will stop coming.
If Malaysians are unwilling to prepare for this eventuality through production technology upgrades, accompanied by ups killing and minimum wages that accommodate the cost of living comfortably, the shock, then, is inevitable and the economic disruption terrible. Minimum wage, hence, is a vital facet of the country’s economic transformation.
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To better facilitate employers meet their needs for skilled expatriate talent, we have put in place a robust online data platform and service-driven process which have helped the centre, which is conveniently located in the Klang Valley, to efficiently process employment pass applications for skilled expatriates within its five-day (5) client charter. Since June 2015, we have worked hard to improve the processing time and have approved more than 74% of Employment Pass applications within this client charter.
In our continuous effort to enhance our facilities and provide improved service in processing skilled expatriate Employment Pass (DP10) on a sustainable basis, we would like to advise that MYXpats Centre will be introducing application charges for all skilled expatriate employment pass and related applications submitted through ESD Online.
Effective 1 June 2016, all new and renewal applications for the Employment Pass (EP), Dependant Pass (DP), and Social Visit Pass (SVP) will be subject to the following application charges:
Type of pass
Application charges per application (Ringgit Malaysia)
GST (Ringgit Malaysia)
Employment Pass
RM 300.00
RM 18.00
Dependant Pass
RM 70.00
RM 4.20
Social Visit Pass (SVP)
RM 70.00
RM 4.20
(NOTE: The amount stated are solely for the skilled expatriate talent application charges and exclude Immigration fees)
In line with the Government’s plan to create leaner and more efficient public services, payment for these application charges can be made online via credit card or internet banking at any time of the day. For more information on the application charges and payment methods, please refer to our Frequently Asked Questions on the Immigration Department’s Expatriate Services Division (ESD) website.
The Malaysia Cabinet is lifting the freeze on hiring foreign workers for four sectors, says Transport Minister Datuk Seri Liow Tiong Lai. The decision was made in light of appeals from the manufacturing, construction, plantation and furniture-making industries, which are facing a major shortage of workers.
“In view of the acute shortage, we have to lift the suspension to allow these sectors to bring in foreign workers,” said Liow.
However, he said that the Cabinet was already looking to improve the system for hiring foreign workers, after which they would gradually lift the hiring freeze for other sectors too.
“On other sectors, we will go on a case-by-case basis, while waiting for the creation of a more foolproof, transparent and accountable system,” he added.
“Workers are important for the productivity of these sectors, so if employers face too many uncertainties in hiring workers, that will not go well for the nation’s economic growth,” he said.
Liow added that it would take time for the Government to engage with the various industries to better understand the situations that each sector faced.
However, he emphasised that it was important for the Government to regulate and have proper control over the hiring of foreign workers in Malaysia.
The Star reported recently that a survey by the Federation of Malaysian Manufacturers showed that 84% of manufacturers were facing a labour shortage, with half of them claiming that they had not been able to fulfil existing orders.
The survey showed 146 companies required 13,270 new workers this year to meet their business needs and replace unfit or returning workers.
Minister in the Prime Minister’s Department Datuk Seri Dr Wee Ka Siong said the illegal foreign workers’ rehiring programme must be made more efficient to assist manufacturers, who were facing a manpower shortage due to the freeze on foreign workers since February.
Only 55,000 illegals have been rehired so far, out of the estimated 1.4 million said to be in the country.
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The freeze on the hiring of foreign workers from February reveals how reliant Malaysia’s economy is on low-wage labour for growth. More engagement needed with industry to avoid labour shortage in certain sectors.
A rough calculation by Malaysian Palm Oil Association chief executive Datuk Makhdzir Mardan showed that in 2013, when the plantation industry had a shortage of 23,500 workers, the opportunity cost came to RM1.6bil. He points out that in 2013, one foreign worker who works as a harvester equalled RM500,000 in productivity.
While the over-arching industrial policy is to produce higher value-added goods and services, the truth is that large segments of the economy is still very much dependent on low-wage labour, particularly of the low-skilled foreign migrant-worker kind.
Migrant workers Manik and Mohammad Delowar, both 27 years old from Bangladesh, are two such workers working on the multibillion ringgit Sungei Buloh-Kajang MRT line. Manik has lived in Malaysia for the last eight years and has worked on three property projects before being employed to work on the MRT project.
Both earn a salary of between RM1,500 and RM1,600 per month, 75% of which is remitted home to support their families. Manik told StarBiz that the freeze, which came about after a public outcry over an agreement between the governments of Bangladesh and Malaysia to supply low-skilled workers, would definitely affect the flow of workers that wanted to work in Malaysia.
“I do not wish to go back to my country as I’ll not be able to find a job there,” he said, adding that unemployment in Bangladesh was high and he had to support a family of six.
Manik paid RM8,000 to an agent and waited a year before securing a job in Malaysia. He sold land and borrowed money in order to pay for the fees. Mohammad, who has been working in Malaysia for eight months, paid RM12,000 in fees.
Their experience tell the often unheard human story of foreign workers in Malaysia. These millions of workers who come from the most part from Bangladesh, Indonesia, Myanmar, Nepal, the Philippines and Vietnam are familiar faces in various sectors of the economy. The construction and agriculture sectors cannot do without them while the services sector, especially the hospitality, food and beverage and security industries, have large numbers of foreign workers.
Although the low-cost model of growth has served Malaysia well in the 1980s and 1990s, it has also made local firms reluctant to adopt technology or more efficient ways of doing things. Malaysia’s membership of the Trans Pacific Partnership makes higher productivity and efficiency ever more urgent.
Economists argue that without a rise in productivity, measured in the production of higher value-added goods and services, wages will continue to be low. The large number of foreign workers with their lower skill sets and low wages makes things worse.
This is not to say that there are no higher value-added goods or services being produced, or that the Government is not encouraging it. The New Economic Model, together with the National Key Economic Areas, have identified various sectors and subsectors in which Malaysia can have a competitive advantage.
Leadership, clear-cut policy on foreign workers and investment in education as well as technology are just some of the issues that come into play as the country strives to reduce its reliance on low-wage workers and move up the value chain.
Master Builders Association Malaysia president Matthew Tee and Makhdzir agree that the adoption of technology and mechanisation will reduce dependence on foreign workers.
Tee said the Government should provide more incentives for construction firms to adopt more efficient processes such as the industrialised building system (IBS) that could reduce dependence on low-skilled migrant workers. He pointed out that reducing the import duties on construction machinery could also help.
Meanwhile, Makhdzir said more funds should be allocated to oil-palm research and development (R&D) to make the industry more competitive. “If we desperately need to make that progress, we need to put in more talent, and more money to make it competitive in terms of R&D,” he added.
Makhdzir said the policy needed to be more flexible where R&D was concerned as talent must be sourced from outside the country if necessary.
But in the meantime, the freeze on foreign workers is causing a lot of problems as news headlines in recent months show. The problem is particularly acute in the construction and agriculture sectors.
Tee said there was a shortage of 1.3 million workers in the construction sector and predicted a shortage of up to 2 million by 2020. “This will cause delay in projects which could result in liquidated damages by clients translating to thousands of ringgit per day,” he adds.
Tee observed that the government-initiated rehiring programme that in part would also legalise illegal foreign workers had only attracted 3% of the 1.7 million total number of illegal workers in the country. He said the requirements to legalise the workers were inflexible and because of that, many did not fit the requirements – one reason why the overwhelming majority had decided not to get properly documented.
He said firms wishing to hire workers under the rehiring programme found it more expensive than hiring fresh foreign workers. On the other hand, Makhzir said there needed to be leadership in tackling the issue while Tee said there needed to be more engagement with industry as the reaction from the authorities had been slow.
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The Cabinet today decided to look into critical foreign labour needs faced by foreign and local companies in Malaysia, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.
International Trade and Industry Minister Datuk Seri Mustapa Mohamed checking out the Coca-cola Bottlers (Malaysia) Sdn Bhd’s New Production Line at the Taman Perindustrian Halal in Nilai
He said in this matter, the Malaysian Investment Development Authority (MIDA) with other agencies including the Immigration Department and Human Resource Ministry will work closely to identify the critical needs.
“As for critical areas, the government has a policy which allows some foreign companies to continue employing new foreign workers.
“…but going foward, our policy is to encourage more Malaysians to be employed by foreign and local companies,” he told a press conference after officiating Coca-cola Bottlers (Malaysia) Sdn Bhd’s New Production Line here today.
“Yes, we do need foreign workers but our policy going forward is to legalise illegal workers… there are about two million illegal foreign workers in this country and at least one million illegal foreign workers needed to be legalised,” he added.
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Please be informed that companies in the distributive trade services sector are required to comply with the Guidelines on Foreign Participation in the Distributive Trade Services Malaysia issued by the Ministry of Domestic Trade, Co-operatives and Consumerism. According to the Guideline, foreign involvement is restricted in certain sectors as outlined below.
Therefore applications for any long-term pass (more than 3 months) including Employment Pass (DP10) for companies in these sectors is NOT ALLOWED. You may refer to http://www.kpdnkk.gov.my for more information.
Restricted sector for foreign involvement under the Guidelines on Foreign Participation in the Distributive Trade Services Malaysia
Supermarket / mini market (less than 3,000 square sales floor area)
Provision shop / general vendor
Convenience store (that opens for business for 24 hours)
News agent and miscellaneous goods store
Medical hall (inclined towards traditional alternative medicines plus general dry foodstuff)
MYEG officers collect thumbprint from illegal foreign workers under the part of the program rehiring process.
Part of the Rehiring program‘s process is to collecting thumbprint from illegal foreign workers in Malaysia. This was done after employers submitted the application and accepted to legalise their foreign workers. A PATI letter will also issue together with “Registration Slip of Employer / PATI”. The PATI letter come with the QR code to access to online check on worker legalisation status.
Here’s the short video walk through the process of collecting thumbprint.
Once completed this step, these foreign workers are one step from getting the work permit / visa sticker. At the meantime they will have a peaceful of mind to go around the town without worrying about the “operasi” to detain them for being illegal workers.
Five main food operator associations in the country have urged the Malaysia government to reconsider its decision to freeze the recruitment of new foreign workers. Malaysia Singapore Coffee Shop Proprietors’ General Association president Ho Su Mong said food operators would be badly affected by the decision, with many of them forced to close their shop early due to lack of workers.
Malaysia Singapore Coffee Shop Proprietors’ General Association president Ho Su Mong said food operators would be badly affected by the decision, with many of them forced to close their shop early due to lack of workers.
He claimed that 5,000 foreign workers would leave the country by June 30 and most of them would not return.
“Many restaurants may shorten their operating hours as they are depending on foreign workers.
“ln Sabah alone, about 2,000 restaurants will have to operate on a half-day basis due to the problem,” he said after holding a meeting with the representatives of the main associations here today.
The other associations were Malaysian Indian Restaurant Owners Association (Primas), Malaysian Muslim Restaurant Owners Association, Perak Sundry Shop Guild and Malaysia Hawkers and Petty Traders Association.
Primas president T. Muthusamy said the government’s decision insisting only foreigners who were already in the country should be employed was not practical.
“Many of the illegal immigrants are not willing to come out and register for work,” he said adding that the associations had sent a memorandum on the issue to Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi recently.
On March 12, Zahid announced employers were no longer allowed to take in new foreign workers and they should instead make do with those already in the country.
Zahid was quoted as saying that employers could take advantage of the rehiring programme as it would allow them to recruit workers from the existing pool of about two million illegal foreign workers in the country who did not come under official statistics of foreign labour.
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The Malaysian Estate Owners Association (MEOA), which represents the interests of those owning small and medium-sized estates in Malaysia, said even without the current freeze on the recruitment of foreign workers, the majority of estates in Malaysia are operating on an estimated average of 85% of the required number of workers.
Small- and medium-sized estate operators in Malaysia are urging the government to withdraw its freeze on the recruitment of foreign workers, in order to allow the plantation industry to operate at an efficient level.
“The freeze creates further scarcity of workers, thus negating the ability of the industry to operate at an efficient and competitive level.
“This is further compounded by the fact that local Malaysians are reluctant to work at these same jobs now undertaken by foreign workers,” it added.
MEOA noted that oil palm produce are perishable and thus, a lack of workers to harvest the crop would mean an unrecoverable loss of income.
“(This is on top of the fact that) the plantation had already incurred huge upfront costs in planting, applying fertilisers and other field upkeep to maximise the production of the palms,” it said.
“In addition to the above biological related losses, increases in cost of production is already squeezing into the margins of any potential derived profits.
“This include the increase in the costs of fertilisers and other inputs essential to the running of the industry by 28-30 % due to foreign exchange fluctuations in which many planters have already committed, the windfall profit levy in Peninsular Malaysia and the anticipated further increase in minimum wages soon,” it added.
Planters’ margin are further affected by the low production attributed to the multiple lagged effect arisen from the El Nino phenomenon.
While it recognises and acknowledges the industry’s heavy reliance on foreign workers, MEOA proposes that the industry and the government work together to draw up a long-term sustainable plan to solve this problem.
“In the meantime, MEOA appeals to the government to repeal its decision to freeze recruitment of foreign workers,” it said.
Deputy Home Minister Datuk Nur Jazlan Mohamed said industry players especially those in the Small Medium Enterprises (SME) prefer using agents to hire workers in order to escape from being held accountable for their welfare.
Meanwhile, it will also end the use of unskilled labour, helping the government’s upskilling effort. Indeed, if employers carry through their threat of passing the increased cost of production to consumers, theoretically, it is justifiable, as long as there is no profiteering. Ultimately, it is up to the consumer to buy or not to buy. And, when the money goes towards the salaries of those doing 3D jobs (dangerous, dirty and difficult), it will, in the end, make these jobs attractive enough for Malaysians who go abroad as 3D workers, because the pay is much better.
“In view of the acute shortage, we have to lift the suspension to allow these sectors to bring in foreign workers,” said Liow.
MEOA noted that oil palm produce are perishable and thus, a lack of workers to harvest the crop would mean an unrecoverable loss of income.